Tax Returns Fairfield County CT

COVID-19 (CORONAVIRUS) Federal Tax Filing UPDATE

March 20, 2020 by Reynolds & Rowella Leave a Comment

Office Operation Update:

Following national guidelines, Reynolds + Rowella will temporarily close our offices as of close of business Friday, March 20th. Our firm’s technology infrastructure and proactive business continuity plan will help to ensure that we can continue our work seamlessly to support our clients from out-of-the-office locations.

IRS Tax Filing Update:

Treasury Secretary Steven Mnuchin announced Friday that the IRS is extending the federal income tax filing deadline to July 15. The deadline extension gives Americans three months longer to file their individual and business income tax returns for the 2019 tax year, without incurring interest or penalties.

The coronavirus outbreak is a critical, developing situation. The health and safety of our clients and team is always a top priority. Based on the rapidly changing conditions and to help reduce the stress on our staff and their families, we will be working our traditional office hours from remote locations. R+R is committed to continuing to work on client returns and will file as soon as possible. If you have any special time constraints, please contact a member of the team so that we can meet your requirements.

Please be assured that R+R is focused on our commitments to you and that we will continue to provide the high-quality service to which you are accustomed. Thank you for your understanding in these very challenging times

We are available to answer any questions you have. Please contact us via email or call us by using the dial by name directory at 203-438-0161.

REYNOLDS & ROWELLA | ACCOUNTING AND CONSULTING FAIRFIELD COUNTY CT

Reynolds + Rowella is a regional accounting firm known for a team approach to financial problem solving. As Certified Public Accountants, our partners foster a personal touch with our clients. As members of DFK International/USA, an association of accountants and advisors, our professional network is international, yet many of our clients have known us for years through the local communities we serve.

Our mission is to operate as a financial services firm of outstanding quality. Our efforts are directed at serving our clients in the most efficient and responsive manner possible, delivering services that exceed the expectations of those we serve.

The firm has offices at 90 Grove St., Ridgefield, Conn., and 51 Locust Ave., New Canaan, Conn. For more information, give us a call at 203.438.0161 or email us.

How to finally conquer your financial
document clutter

November 28, 2017 by Reynolds & Rowella Leave a Comment

Financial records are notorious for being messy. Bills, paycheck stubs, tax returns and bank statements have a way of getting tucked into random places. Luckily, there are a few pretty painless ways to organize your important documents.

Put all your financial records in one dedicated spot

To ensure that bills are paid on time, bank statements are reconciled and important documents are properly filed, set aside a specific location in your home for financial tasks. It may be a place where you keep a computer or filing cabinets. Once that area’s set aside, pick a time each week to pay bills, enter financial information into check registers and organize documents.

Organize in a way that makes sense to you

Many people use a computer program to track everyday spending and bank accounts. Others use a pencil and paper. The key is to use whatever system makes sense to you and helps you maintain your finances with a reasonable amount of effort.

Protect the important stuff

Don’t leave your only copies of wills, tax returns, stock certificates or emergency contacts in a pile on the desk. Such documents should be put in a safe deposit box or home safe. Ask your attorney or financial advisor to store the signed copy of your will in a secure location.

Get rid of the documents you don’t need anymore

Many papers (such as regular household bills) can be shredded soon after receipt. Other documents, such as those supporting the cost of investments and real estate, should be retained longer for tax purposes. A general rule for tax returns (and documents that support the returns) is seven years. When it’s time to discard those old pieces of paper, fire up the shredder.

Not sure about what financial records you need for your taxes? Contact us at consulting@reynoldsrowella.com – we’ll talk you through it.

GROWING A BUSINESS FROM REVENUE TO EXIT

November 20, 2017 by Reynolds & Rowella Leave a Comment

Most businesses start with an idea that is brought to market. Customers purchase the product or service and the business begins to grow. Eventually, if the company grows enough it acquires ‘value’. And it is that ‘value’ that a buyer will purchase in an exit transaction. This newsletter is written to help business owners think through this cycle of growth as they proceed towards an eventual exit. This newsletter is a guide to thinking about revenues, profit, valuation and how they will impact your eventual exit.

An Initial Business Focus on Revenue

In the first few years of a business, the business owner(s), almost always, are solely focused on attracting revenue to the new company. Simply put, revenue is the gas that keeps the engine going, without which bills cannot be paid and the enterprise cannot continue. At the beginning, the businesses’ very survival is at stake. At this stage in the business, and with the mindset of the owner, there is a myopic focus on revenue. One of the challenges that owners face is the initial transition from generating revenue to accumulating consistent profits.

The Consistent Generation of Business Profits

Once a business is successfully growing – meaning that revenue alone is no longer the daily obsession – there should be a shift in a business owner’s mindset to thinking about company profitability. At this stage owners need to consider how the revenue that the company is generating is helping to drive and shape the business profits. Their vision starts to broaden and they start to become more strategic in their thinking, seeking to attain higher-quality, more profitable revenue. So, the initial shift from revenue to profitable revenue begins to take shape as the company’s growth depends on profits to fund its increased overhead.

Moving from Consideration of Profitability to Increasing the Value of the Business

At the more advanced stages of a business, owners start to ask themselves ‘what is my business worth?’ The focus at this point in time begins to look beyond revenue and profits and starts to look at the company value. Here, an owner should be thinking about the ‘quality’ of its revenue and profits. In other words, is the revenue and profit recurring in nature or is it project-oriented and one-time in nature? Are competitors squeezing margins or are there high barriers to entry (or other factors) that help protect your margins?

These types of advanced questions indicate a focus on what a future buyer will see when they look to acquire the business. By having protected margins, consistent profits, and organized systems and people, the value of the company increases. And when owners begin to focus on these critical areas, they are only one small step away from asking the ultimate question, i.e, ‘who will own and run my business next and how will I benefit and/or get paid the value of the business?’

The Final Step, from Value to Exit

Finally, when the business owner has successfully transitioned their thinking through this entire process, they can begin to focus on their exit. At this point in time, an owner begins to consider who will pay them for the value that lies within the business. Some owners want to transfer the business to co-owners, managers or family members, while some want a buyer to pay the highest price. Whatever exit path is chosen, the owner is now thinking about how value will be extracted from the business while the business continues on into the future.

A Caveat on Advanced Planning

Ideally all business owners think about their eventual exit before they begin to build a company. Very few owners will actually succeed in doing this because new businesses are risky ventures and it is difficult to see beyond the survival phase, far enough ahead to figure out who will want to own the business next. That said, consideration of who will own your business next is always recommended, at any stage of the business.

Concluding Thoughts

It is only when the business owner can successfully bring themselves to the highest level of thinking, are they in the position to plan their exit from that business. So, how many owners of privately-held businesses will advance their thinking this far? That is the ultimate question when considering how many business owners will be successful with their exits and we hope that this newsletter provides a bit of guidance for your thinking towards a successful exit.

Contact Steve Risbridger at stever@reynoldsrowella.com or 203.972.5191
for assistance navigating the complex matters related to exit planning.

How to get the most bang for your tax buck
for your meal expenses.

November 15, 2017 by Reynolds & Rowella Leave a Comment

Everyone loves a free meal – especially employees. However, your business tax return will be affected differently depending on the circumstances of the mealtime experience.

While you can generally deduct only half the cost of meals related to your business activities, the tax code includes specific exceptions that allow a deduction of 100 percent of what you spend on food and beverages in certain situations.

Here are three examples:

Social gatherings and parties.

That once-a-year holiday party qualifies for 100 percent deductibility as long as it is primarily for the benefit of all your employees.

Food with nominal cost.

Do you supply morning-meeting donuts, meals for overtime work or special occasion treats for your staff? “De minimis” employee benefits — those small items your business pays for that are not considered taxable income to your employees— are typically 100 percent deductible.

Employees on emergency calls.

If you provide food for your employees during working hours so they can be available for emergency calls, the meals will likely be able to be deducted 100 percent.

Remember that you’ll still need to keep detailed records to substantiate your deductions for meals and food served under these exceptions.

We’ll be happy to help you review your expenses and set up a system to account for items that qualify for a more generous deduction, contact us at consulting@reynoldsrowella.com

FOR IMMEDIATE RELEASE – REYNOLDS & ROWELLA, LLP

July 24, 2017 by Reynolds & Rowella Leave a Comment

Jessica Smith, CPA from Reynolds & Rowella, LLP Selected as one of only 38 to AICPA’s 2017 Leadership Academy
AICPA Leadership Academy to be held in October in Durham, N.C.

Ridgefield, CT (July 19, 2017)

Jessica Smith, CPA was one of only 38 CPAs honored by the American Institute of CPAs (AICPA) as a member of the Leadership Academy’s ninth graduating class. Jessica Smith was selected based on her exceptional leadership skills and professional experience for the four-day Leadership Academy program, which will be held from October 1-5 in Durham, N.C.

Jessica Smith, CPA has her bachelor’s in accounting from Rider University and master’s in accounting from the University of Connecticut. Jessica has earned her CPA from New York and Connecticut as well as her not-for-profit certificate from the AICPA. Jessica works as a senior associate at Reynolds & Rowella, LLP in the assurance practice.

“The Partners of R&R are very proud of Jessica acceptance into the AICPA Leadership Academy. Jessica has shown on a daily basis those qualities necessary regarding personal and professional development. Her acceptance into the Academy we feel will enhance those qualities.” – Frank Rowella, Managing Partner at Reynolds & Rowella, LLP

The AICPA Leadership Academy was designed to strengthen and expand the leadership skills of promising young professionals while they network with a peer group of talented and motivated CPAs.The Leadership Academy will feature career-development workshops and sessions with some of the accounting profession’s most prominent influencers, including Kimberly Ellison-Taylor, CPA, CGMA, chairman of the American Institute of CPAs and Association of Certified Professional Accountants, Barry Melancon, CPA, CGMA, American Institute of CPAs president and CEO, Association of Certified Professional Accountants CEO, and Mark Koziel, CPA, CGMA, Executive Vice President – Firm Services, Association of Certified Professional Accountants.

Participants are selected from public accounting firms of all sizes, business and industry, education and government. The 2017 class contains a diverse range of ethnicities and is split evenly between females and males.

The 2017 Leadership Academy attendees were recommended by their employers, state CPA societies or both. Candidates submitted resumes which included work history, licensure information, professional volunteer activities, community service and awards and honors. Candidates also submitted a statement explaining how participating in the Leadership Academy would impact them personally and professionally and wrote an essay on the topic “what leadership competencies and characteristics will be essential to successfully lead and advance the CPA profession in 2025?”

To date, more than 270 CPAs have participated in the AICPA Leadership Academy, many of whom have gone on to take on leadership positions in their firms, businesses and volunteer organizations.

More information about the AICPA Leadership Academy is available online.

Your Taxes Are Filed….but

June 29, 2017 by Reynolds & Rowella Leave a Comment

Your Taxes Are Filed, But You Still Have Questions? Here are answers to the 4 most common questions you may have.

Many taxpayers have questions after they file their tax returns. The IRS provides answers to many of them. These are a few of the most common.

How can I check the status of my refund?

You can go online to check on your refund if it has been 24 hours since the IRS would have received your e-filed tax return or four weeks after you mailed your paper return. Go to www.irs.gov and click on “Where’s My Refund?” You will need your Social Security number, your filing status, and the amount of your tax refund.

What records should I keep?

Keep receipts, canceled checks, or other substantiation for any deductions or credits you claimed. Also keep records that verify other items on your tax return (W-2s, 1099s, etc.). Keep a copy of the tax return, along with the supporting records, for seven years.

What if I discover that I made a mistake on my return?

If you discover that you failed to report some income or claim a deduction or tax credit to which you are entitled, you can correct the error by filing an amended tax return using Form 1040X, Amended U.S. Individual Income Tax Return.

What if my address changes after I file?

If you move or have an address change after filing your return, send Form 8822, Change of Address, to the IRS. You should also notify the Postal Service of your new address so that you’ll receive any refund you’re due or any notices sent by the IRS.

For answers to other tax questions you may have, contact us at consulting@reynoldsrowella.com

Tax Audits

June 8, 2017 by Reynolds & Rowella Leave a Comment

Tax Audits: Learn what auditors will look for when trying to prove your deductions so you are prepared.

Tax audits still remain relatively rare, but should you face one, be prepared for questions. Tax authorities tend to deny everything and then make you prove that your deductions are valid. Here are some suggestions.

To prove your deduction most auditors are looking for two required documents.

Receipts.

The receipt should clearly show the company or entity, the date, the value of the activity, and a clear description of the activity. In the case of donations, the receipt should also have a statement that confirms you received no benefit in return for your donation. It should also state that you are not retaining part ownership of the donation.

Proof of payment.

You will need a canceled check, a bank statement, or a credit card receipt and related statement.

Other proof.

In addition to the above, there are certain deductions that require additional documentation. Here are the most common:

Contemporaneous.

Any proof of payment and receipts should generally match the date of the activity. The IRS and state agencies are quick to dismiss receipts that are obtained after the fact. A good rule of thumb is to ensure receipts and proof of payment are received at the time of the activity. If not, at least make sure you have receipts and payment proof within the tax year the deduction is taken.

Mileage logs.

You will need to show properly maintained mileage logs for business miles, charitable miles, and any medical mile deductions.

Business records.

You will need financial statements for any business-related activity with supporting documentation.

Residency.

If you live in multiple states or multiple countries, you may have to prove where you lived during the year. Keep records that show your physical presence to support your tax filings.

Proof of non-reimbursement.

If you claim any unreimbursed business expenses, many states are asking you to prove that you were not able to get these expenses reimbursed from your employer. The easiest ways to do this are to show a denied expense report or to get your employer to write a letter that confirms your expenses were not reimbursed. Those most impacted by this are musicians, barbers/hairstylists, construction workers, and anyone who uses their own tools to do their job for their employer.

While you can never be completely sure you won’t face an audit in your lifetime, you now know which documents an auditor will want.

If you need assistance, we are here to help. Contact us at consulting@reynoldsrowella.com

Taxable or not taxable?

May 31, 2017 by Reynolds & Rowella Leave a Comment

Taxable or not taxable? The taxability of income, gifts, or services you receive might surprise you.

Have you ever wondered about the taxability of funds or services you receive? There are many areas in the tax code that cause confusion regarding what’s taxable. These are some of the most common.Alimony.

Alimony

is taxable to the person who receives it and deductible to the person who pays it. Special rules apply. Make sure you have proper documentation as part of a divorce decree to ensure you can support your tax position.

Child support

Child support is not taxable to the person who receives it on behalf of their dependent. It is also not deductible for the person who pays it.

Free services

Free service is almost always taxable as ordinary income under IRS barter regulations. You should report the fair market value of services received as income on your tax return. If you exchange services, you can deduct allowable business expenses against the value of services received.

Illegal activities

Even income received from illegal activities is taxable income and must be reported. Incredibly, the IRS even states that stolen items should be reported at the fair market value on the date the thief stole the item.

Jury duty pay

This is taxable as ordinary income. Yes, even doing your civic duty can be a taxable event.

Legal settlements

A general rule of thumb with legal settlements is to consider what the settlement replaces. If the settlement revenue replaces a taxable item, like lost wages, the settlement often creates taxable income. This area is complex and often requires a detailed review.

Life insurance proceeds

Generally life insurance proceeds paid to you because of the death of an insured are not taxable. However, there are a number of exceptions to this general rule. For example, if you receive benefits in installments above the value of the life insurance policy at time of death, or if you receive a cash payout of a policy, you could have taxable income.

Prizes

Most prizes received should be reported as ordinary income using the fair market value of the item received. This area has been a major surprise to contestants on game shows and celebrities who have received large gifts at celebrations like the Academy Awards.

Unemployment compensation

Typically unemployment compensation is to be reported as taxable income. Many are confused by this because of a temporary federal tax law that made unemployment compensation non-taxable during the recent economic recession. This is no longer the case.
Some of these areas can be complicated. What is most important is to realize when to discuss your situation.

Contact us at consulting@reynoldsrowella.com if you need help.

Couples and money: Five suggestions for financial health

May 18, 2017 by Reynolds & Rowella Leave a Comment

Do you have a financial plan that works for both you and your spouse? Here are suggestions that can help.

1. Organize your finances.

Get a handle on your income and spending, by both of you individually and as a couple. By reviewing the overall picture of how you spend money, you can focus on potential problem areas.

2. Set goals.

How much will you accumulate in bank accounts and investments over the next three years? Five years? Ten years? Have you anticipated future expenses? Say, for example, you’re dreaming of a vacation in Europe for your anniversary. You’ll want to start saving now so you won’t need to finance the trip with credit cards.

3. Build an emergency fund.

How much is enough for emergencies? As a general rule, set aside three to six months of your combined gross income in easily accessible accounts, such as savings or money market accounts.

4. Save for retirement.

Participate in your employer’s retirement plan and contribute at least as much as the amount your employer will match. The earlier you start saving, the more you’ll accumulate. It’s that simple.

5. Formalize an estate plan.

Have an attorney draft a will and set up a financial power of attorney so your assets are distributed according to your wishes in the event of death or incapacity.

For advice and guidance specific to your situation, contact us at consulting@reynoldsrowella.com we’re here to help.

Tax bracket, tax rate, what’s the difference?

May 2, 2017 by Reynolds & Rowella Leave a Comment

The difference between your tax bracket and your tax rate is more than a trick question. For example, knowing your tax rate gives you an accurate reflection of your tax liability in relation to your total income. Knowing your tax bracket is useful for planning purposes. For instance, you may want to spread a Roth conversion over several years in order to stay within the income limits of a particular tax bracket.

So, what’s the difference between the two? The main difference is that a tax bracket is a range of income to which a specific tax rate applies, while your effective tax rate is the percentage of your income that you actually pay in tax. Put another way, not every dollar is taxed at the same rate. Your tax bracket shows the rate of tax on the last dollar you made during the tax year. Your effective tax rate reflects the actual amount you paid on all your taxable income.

For example, say you’re single and in the 25% bracket for 2016. That means your taxable income is between $37,650 and $91,150.

Yet the tax you pay is less than 25% of your income.

Why? Because the 25% tax rate only applies to the amount of taxable income within the 25% bracket. The tax on income below $37,650 is calculated using the rate that applies to income in the 10% and 15% brackets.

So, if your 2016 taxable income is $40,000, only $2,350 is taxed at 25%. The remainder is taxed at 10% and 15%, leading to a “blended” overall rate. The result: a tax bracket of 25%, and an effective tax rate of less than that.